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alstry (35.49)

What should citizens do when its Banking System is terrorizing the Nation?

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May 22, 2010 – Comments (13)

Bankers are paying essentially nothing for trillions of taxpayer funded dollars....and then turning around and loaning it right back to the taxpayers at much higher rates draining our nation's savings.

If bankers can do this....why can't citizens?

In addition, bankers are paying the citizens practically nothing for savings yet charging historically high spreads to borrow?

You wonder why credit is drying up and the private sector is shutting down?

And we sheep just sit there....occasionally reading Alstry's rants.....and watching our government do little....as millions of Americans lose their homes, livlihoods and life savings.

Heck we don't even care as thousands of our kids are dying overseas.......

We all just sit there like rich spoiled kids resting on the success of prior generations each scared to say a word.....scared to rock the boat.....afraid to think as the last remaining few dollars get looted by Wall Street.

And then one morning we will wake up.....and it will be too late.....the wealth will be gone and only held by a few.

Evil triumphs when the good do nothing.....and evil is way ahead right now.

13 Comments – Post Your Own

#1) On May 22, 2010 at 11:30 AM, dibble905 (92.24) wrote:

Even if the banks borrowed at some higher rate from the fed, there will always be a spread. That is, since the bank is loaning out money to individuals, they must be compensated for the risk of those individuals defaulting on their loans. The only difference between now and then is the rate the fed is charging (0.25% vs. 2.5%), the spread is still around the same (4%). Some would argue, the spread should be even higher considering the economic uncertainty and people being unable to pay their bills.

Get real.

Blaming the bankers is easy. But I blame the ones who picked up loans they could never repay -- the home owners. You can blame the bankers all they want for loaning the money out and "taking excessive risks", but their 'loaning'didn't cause this crisis -- it was the people's inability to repay the enormous loans.

Who are you trying to blame here. The gun manufacturers or the one who took the world hostage with the gun?

If people were more capable and responsible, we would not be in this mess.

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#2) On May 22, 2010 at 12:13 PM, moneychase (< 20) wrote:

Silly me.

I assumed your blog was actually going to be helpful by answering the question posed in your title.

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#3) On May 22, 2010 at 1:07 PM, alstry (35.49) wrote:

Get real?

First of all the difference is not 4%....very few can borrow at 4%....it is more like 6 to 30%.  Further, the relative spread between 0 and 4 is much greater than between 3 and 7 even though the absolute difference is the same.

Second, if we loaned money to citizens for free, just like we did the bankers, and they in turn purchased government bonds, just like the bankers, every single loan in America could be paid back, no homes would be foreclosed, and the government would be gurananteed its principal.

And FYI, it is not abut blaming the bankers my little sheep, there is lots of blame to go around on all sides.......it is about BAILING out the bankers and not bailing out the citizens.....if you bail out one, you must bail out both.....or else bail out none.

Hopefully equitable treatment is not too difficult a concept to understand and in keeping with the American legal tradion of justice and fairness.

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#4) On May 22, 2010 at 1:13 PM, alstry (35.49) wrote:

Oh, one more thing....under the current system....there is no risk for the bankers.....if they fail, they get bailed out fully and get billions in bonuses.......personally.

if the citizens fail they lose their homes and life's savings.

NEVER HAS ANYTHING LIKE THIS HAPPENED IN AMERICA BEFORE......and subjects our nation to some very serious social unrest issues going forward.

How long do you think people will put up with this nonsnese and disperate treatment...we already have 10,000,000 delinquent mortgages...and growing.

As more and more figure this out....the future could be very interesting.....

REPORT: D.C. police escorted union protesters to bank exec's home...

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#5) On May 22, 2010 at 3:00 PM, APJ4RealHoldings (25.66) wrote:

SIMPLE. Citizens should MOVE THEIR DEPOSITS OUT OF THE BIG BANKS - essentially disconnecting the banks' life support system.

there are plenty of credit unions, and local community banks that are more sound, decent rates, & are more likely to benefit your own community - and also in the long run stop the terrorizing as deposits have left the big banks.

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#6) On May 22, 2010 at 3:10 PM, APJ4RealHoldings (25.66) wrote:

just to help out others here on CAPs who expected to find a solution here by clicking on this blog....here you go: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=395496&t=01001353231915820646

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#7) On May 22, 2010 at 3:12 PM, alstry (35.49) wrote:

It wouldn't make a difference....big banks are not making their money from citizen deposits....rather prop trading and debt syndication.

The big banks have enough of their own capital, that which has been provided to them by government, and corporate/foreign capital to sustain themselves.

That said, any such move would help community banks which are starving for capital right now.

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#8) On May 22, 2010 at 3:35 PM, APJ4RealHoldings (25.66) wrote:

alstry,

big banks are in existence because of citizens deposits. not just because of the past, but because of the present.  they will exist tomorrow only because they have citizens deposits tomorrow. 

if lets say....10-15% of deposits were withdrawn from those big 4 banks; JPM Chase, Wells Fargo, Bank of America, Citi

then they would fail, broken into parts, or be bought out by competitors.

10-15% deposit amount is very significant & material to capital reserves and would take MASSIVE amounts of other forms of capital to re-sustain themselves - so much economic & political friction would be caused by trying to fill the capital hole in THIS scenario that it would prove more easier to let them be brought into receivorship rather then re-capitalizing them.  That is the most likely scenario if that were to occur.  But the chance of 10-15% of deposits being moved out of the big 4 is not even remotely likely scenario at all anytime soon.

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#9) On May 22, 2010 at 5:32 PM, dibble905 (92.24) wrote:

"Get real?

First of all the difference is not 4%....very few can borrow at 4%....it is more like 6 to 30%.  Further, the relative spread between 0 and 4 is much greater than between 3 and 7 even though the absolute difference is the same.

Second, if we loaned money to citizens for free, just like we did the bankers, and they in turn purchased government bonds, just like the bankers, every single loan in America could be paid back, no homes would be foreclosed, and the government would be gurananteed its principal.

And FYI, it is not abut blaming the bankers my little sheep, there is lots of blame to go around on all sides.......it is about BAILING out the bankers and not bailing out the citizens.....if you bail out one, you must bail out both.....or else bail out none.

Hopefully equitable treatment is not too difficult a concept to understand and in keeping with the American legal tradion of justice and fairness."

So wait,

You're saying, because the banks received bailout money, it is more equitable for the government to give money to ordinary citizens who need help paying their mortgages because they borrowed outrageous sums of money it could never repay?

No.

The money was provided by the government so that select people who borrowed money it could never repay would not burden the rest of the American economy by forcing the banks into hibernation -- preventing any money from flowing to mainstreet.

The anger that is fuled at the banks is ridiculous at best. Before you start marching your way onto bankers lawns (thanks for the video, btw), look at your neighbours first. I am way more pissed off at the people who have borrowed outrageous sums of money and simply "walked away" from their homes because they could not maintain their payments -- causing huge property devaluations for everyone and plaguing the country.

If I had to choose between a bank bailout, a bailout of heavily indebted people, or both. I would choose the bank bailout. Just because the banks are earning money doesn't mean my anger has to go towards them. My anger is towards the irresponsible people.

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#10) On May 22, 2010 at 6:19 PM, alstry (35.49) wrote:

If you havn't figured it out yet..all those people who irresponsibly borrowed over the past ten years are the same people who drove our prosperity...you may want to sent them a thank you note.

You don't have to choose between one or the other....choose both or none........that is the American way.

BTW...banks are not earning money....they are essentially stealing it from the population.......you will soon find this out.

People didn't mind Madoff making money either.......I guess you were upset at his clients for living lavishly off him.

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#11) On May 22, 2010 at 7:01 PM, dibble905 (92.24) wrote:

"If you havn't figured it out yet..all those people who irresponsibly borrowed over the past ten years are the same people who drove our prosperity...you may want to sent them a thank you note."

What prosperity. SPX is back to 1998. By being irresponsible, they sent us back a decade. Now the general population can suffer the consequences of them over the next several decades :)

"You don't have to choose between one or the other....choose both or none........that is the American way."

I will choose between one or the other, because both doesn't make sense as you so put it (equality), and doing nothing would have caused greater harm.

"BTW...banks are not earning money....they are essentially stealing it from the population.......you will soon find this out."

Maybe. Do I condone the Banks from taking 0% loans and investing it into treasuries which have higher yields? Well, it's not  about whether I condone the banks from doing it or not -- they are simply doing what makes sense. Better yet, put it this way... The banks do not see better opportunities elsewhere; that includes loaning it to people who might need the money. If the people become more responsible with it, perhaps the banks will also feel more comfortable earning the risk premium over treasuries in doing so.

BTW, the banks could always loan at the fed rate and re-invest it into higher yielding treasuries. Before, they didn't, because lending was profitable. Right now, it is not -- thanks to people being irresponsible.

The only thing the government 'can' do to make banks lend to people rather than purchase their debt is to make the environment where it makes sense for the banks to do so. Cutting off the loans to banks would not be a viable option as all it would do is force the banks to de-leverage even more, increase loan rates to supplement lost income and increased risk. It will not help anyone.

Its either the people learn to become more responsible or the government needs to slam the hammer down and regulate the heck out of the whole process so the 'sheep' can't make their own decisions. Considering I don't exactly find the government the most capable in doing any kind of regulation, we better hope the people begin to shape up.

"People didn't mind Madoff making money either.......I guess you were upset at his clients for living lavishly off him"

What the heck are you talking about? Report this comment
#12) On May 22, 2010 at 7:28 PM, dinodelaurentis (58.11) wrote:

Dang poor people, always ruining it for the rich!!! (shakes fist)

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#13) On May 24, 2010 at 1:37 PM, jason2713 (< 20) wrote:

If you don't understand what Alstry is saying.

1) Banks get money at 0%

2) They lend this money back to the gov't via buying treasuries

3) the interest being paid on these treasuries come from tax payers - you and I

4) The money they make is paid back to bankers in bonuses -  paid by us, citizens who also bail them out when they assume too much risk (tails we lose, heads they win)

These "profits" are not helping society, they are leeches - there is no symbiotic relationship here.  Why do bankers get lavish bonuses when they run the banks into the ground? 

I'm of the camp that believes the banks should have been allowed to fail.  It would have paved the way for other smaller banks and free markets to decide who gets the slices of pie that was left behind.  

The meaning of "free markets" is almost an extinct notion anymore.  Healthcare?  Banks?  Automobiles?  its a joke, and a sad state of our country.  At some point, we won't even recognize this country anymore.

 

 

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